Deregulation, competition, and the back-to-basics utility strategy have created tremendous pressures for utilities to cut operating costs while improving customer service. In this...
CIS: The new Profit Machine
replacing the whole suite, but adding or exchanging functionality for more efficient functionality, newer functionality, and more reliable functionality."
According to Charles Goodman at Indus, spending in the CIS market has been fairly flat. But he is optimistic and sees strong interest building with top-tier accounts that need to replace large legacy systems. Goodman believes that to some extent, utilities have been waiting to make a move until they find a solution that provides a better alternative than what traditionally has been offered in the past. He finds feedback from the market (utilities, analysts, and consultants) that the SDM paradigm can provide the answer, by offering a new alternative for approaching the management and optimization of all the aspects of the utility's business of delivering service to their customers. That SDM paradigm encompasses a holistic view of the organization, with information flows and processes facilitated across traditional "silos."
Upgrade or Replace?
What factors do utility companies need to consider when deciding whether either to upgrade or replace their CIS systems and software? Cost is always a factor, but so are the utility's goals, either short- or long-term.
According to Alliance Data System's Jerrier, utilities need to look at risk-mitigation, overall strategic direction, quality of service, and reputation of partners. "Those are the decision criteria we find most people run through," he says. "Cost is always a driver, and then speed, simplicity and self-confidence." How quickly can you get to market? Can you not over-complicate the issue and be confident in your decisions? SAP's Wolf agrees that it is important to look at reliability of the vendors. Especially in the past couple of years, he says, the customer has to investigate reliability when trusting someone with the core business and find out how long they can rely on receiving a response when they have a need for it.
SAP's Johnston believes the answer depends on the strategy of the utility. Some utility companies aim to improve their customer service, reduce their cost of ownership, interface costs and system support costs, and offload a lot of their operating costs onto some of the customers for the customer self-service application. He argues, "Depending on the segment, you will know whether they are interested in upgrading or replacing their CIS." Deregulation also remains a factor. "I know deregulation is low, but still we have had some customers that are still moving ahead to prepare for deregulation even though they are in a non-deregulated state," he notes.
Mergers or acquisitions are another reason for upgrading or exchanging CIS software. "Companies that recently acquired other companies, with other IT solutions for example, may want to go to other platforms-either just one vendor or just one strategy in order to decrease redundancies they have and to harmonize the whole landscape they have to maintain," Wolf explains. Johnston agrees, noting that mergers and acquisitions are driving utilities to think about whether they should replace or merge their CIS systems into one platform. "We have several customers right now that are actually going through that," he notes. "They are merging and